It can be a crucial tool for preserving financial stability, but buying life insurance around retirement age or if you're a person with no dependents — or are a dependent yourself — is typically not worth the cost.

When you buy a life insurance policy, you pay a premium to ensure that a specific person, called the beneficiary, will receive a pot of money when you die. In many cases, the monthly payment is a small price to pay to ensure your family is left with enough money to pay bills, eliminate any debts, and cover daily expenses in your absence.

But depending on your financial situation, it may not always make sense to pay for life insurance. Here are three types of people who usually don't need life insurance:

A single person with no dependents

If you're a single person with no dependents, you probably don't need life insurance — at least not yet. Financial experts recommend life insurance particularly for people who financially support either a spouse, children, or other relatives. That means people other than themselves rely on their income to live.

That's not to say buying life insurance is a bad idea if you are single and have no dependents — your designated beneficiary, whoever it may be, will still get a cash payout. However, there may a better use for the money you would use to pay the premiums.

If you hope to start a family in the future or think you may have to support aging relatives, it may be smart to hold off buying life insurance until you know how much coverage is appropriate.

One exception: you have debt that won't be forgiven upon death. Some private student loans and most mortgage loans still need to be repaid, even if the primary borrower has died. If there's no cosigner or joint owner on your student loans or home loan, whoever inherits your debt will be responsible for making the payments.

Anyone who anticipates there won't be enough cash in liquid accounts to cover outstanding debt payments may consider an inexpensive life insurance policy to help make up the difference. In this case, the best option is usually a term life policy, as it's cheaper and lasts for a specific period of time.

Retirees and pre-retirees

Life insurance premiums tend to increase prohibitively with age — as health declines, a person's life becomes more expensive to insure — so buying a policy later in life is typically not cost-effective. According to an analysis of 80,000 life insurance quotes by Noexam.com, the average monthly premium for someone in their late 30s is about $42. By age 50, the average cost rises to nearly $145 a month, and by age 60, the average cost is over $200 a month.

If you have heirs, there are often better ways to make sure they are taken care of financially in your absence than buying a last-minute life insurance policy, such as a trust or naming them as the beneficiary on your retirement accounts.

Kids and college students

This may go without saying, but as a reminder: Children and college students don't need their own life insurance policy. The only (and unusual) exception is for a child who supports their family, like a child actor. In that case, it's possible to purchase a policy for the child, although the adult is still the policyholder.

In general, kids and young adults are most frequently the parties being protected by a parent, grandparent, or other guardian's life insurance policy. Despite youth being on their side, there's no real benefit to buying life insurance as a college student with no financial obligations.

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

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